Carbon Offset Prices Fall, Buyers Focus On Quality

February 16, 2009

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Prices for carbon offsets in a voluntary market are falling as the recession has left companies struggling to raise cash. However, market participants and analysts say the market is surviving (although at lower prices), with buyers focusing more on quality of the offsets instead of the quantity.

“The market has slowed down but that doesn’t necessarily mean companies are backing out of offsetting strategy as most are committed to a carbon management strategy for a few years,” Johannes Ebeling, senior consultant at offset sellers EcoSecurities, told Reuters.

“It means they might reconsider the types of projects to support,” said Ebeling.

Currently the most popular projects are in the renewable energy sector, especially wind or hydro power in India and China. The prices for these offset credits has dropped to around $5 to $6 from $7 to $8 late last year.

On the consumer side, Brighter Planet CEO Patti Prairie recently said that despite the economic slowdown, this will be the year when knowing your carbon footprint will become a classy thing for consumers.

In offset related news, profit margins for sellers of carbon offsets under the Kyoto Protocol have collapsed to zero as emissions prices tumble, according to analysts IDEAcarbon.

“This puts project developers in jeopardy because buyers can now purchase cheaper, risk-free Certified Emissions Reductions (CERs) directly from the market,” IDEAcarbon’s Tenke Zoltani told Reuters.

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